We fought for a Retail Trader against Zerodha to win ₹10.39 Lakhs | Fraud Free Ep-1

In today's video, we break down how we secured a ₹10.39 lakh arbitration award against Zerodha on behalf of a retail commodity trader—Saurabh—who was squared off abruptly and unfairly by the broker’s RMS. Why does this case matter?

Because it’s not just about a number—it's about fairness, accountability, and the rule of law in broking. Let’s walk you through the structure, the story, Zerodha’s standpoint, our approach, and the arbitrator’s decisive observations.

Vijay (name changed), a conscientious commodity trader trading in Silver May Futures, trusted the system—until the night it failed him.

What happened?
On April 2, 2024, Saurabh had 6 lots of Silver May Futures, hedged and seemingly safe. He initiated an exit earlier in the day, canceled it, managed his margins.

Later, at 7:49 p.m., he placed another exit order—it went through. But then, at 10:33 p.m., without any prior alert, Zerodha’s RMS squared off all six lots—inflicting a ₹10.39 lakh loss.

There was no warning. Earlier that day, margin alerts came instantly. But this time? Nothing—not even an SMS or platform message.

On. theother side, Zerodha argued that the hedge broke, margin requirement jumped to ₹51 lakh, while Saurabh had ₹38 lakh—thus RMS action was justified.

Alerts are triggered only upon each 5% threshold. Since the margin shortfall was already at 123%, the next alert threshold was 130%. Since square‑off occurred at 127%, no alert was triggered.

We examined:
Trade logs, timestamped alerts, and margin statements.
Zerodha’s RMS policies, internal thresholds, client disclosures.
SEBI framework and MCX arbitration rules.

Key findings:

Communication failure — No alert at a critical juncture.
Excessive action — Squaring off all 6 lots when only 4 were necessary. Two were reinstated soon after, reflecting confusion.
No human consideration — Automation without a ‘cool‑down’ or human review forgotten that a real person was affected.
Policy ambiguity — No document clarified time given to traders before square‑off—even though fairness demands clarity.

We filed arbitration under the MCX arbitration framework (SEBI‑recognised). After conciliation failed, we moved to arbitration.

Zerodha defended itself scouring terms of service, RMS triggers, and automation disclaimers.

But we cut through the complexity by focusing on this: What about human accountability?

It came down to one pivotal question: “Why didn’t you notify the trader at 123% margin shortfall?”

Without a robust answer, the arbitrator observed: Zerodha’s RMS failed to communicate promptly when it counted most.

The square‑off was disproportionate—only the minimum lots should have been closed.

The arbitrator ruled in favour of Saurabh, awarding ₹10.39 lakh to compensate for the full loss due to the unjust RMS square‑off.

For him, it wasn’t merely about recovery—it was about upholding accountability.

Why did we win? Because fairness matters. And a system, however automated, must operate transparently and humanely.

This case isn’t just about ₹10.39 lakh—it’s about reinforcing that automation must be governed by rules, transparency, and respect for the trader. We were proud to ensure justice for Saurabh—and we hope it inspires many others to do the same.

If you’ve faced similar issues, share your story in the comments—or reach out if you’d like to explore how regulatory dispute resolution can work for you. And of course, like and subscribe for more civil-litigation meets broking‑system breakdown deep dives.

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0:00 - 1:29 Introduction
1:30 - 1:51 Background of the Victim
1:52 - 3:06 Case Details
3:07 - 3:38 Reason being the Mistake
3:39 - 4:08 What is Hedge Break?
4:09 - 5:00 RMS Functioning
5:01 - 6:27 How Chaos Unfolded?
6:28 - 9:33 How Zerodha Responded?
9:34 - 10:08 Terms & Conditions LOGIC
10:09 - 11:12 Nobody liked this statement by Broker
11:13 - 13:59 Our Side of Arguments
13:59 - 15:12 Observations of the Arbitrator
15:13 - 16:40 Final Order of the Case